ReGive, a mutual society registered with but not authorised by the Financial Services Authority (FSA), was offering 5% on its one-year fixed-rate savings bond in July. On its website the organisation described the bond as a "smart, ethical investment meeting your financial, social and environmental needs".

But despite a prominent banner on the website stating that the organisation is an "FSA registered mutual society", ReGive is not authorised to sell regulated savings schemes and people who invest in its scheme will not be able to complain to the Financial Ombudsman or be compensated by the Financial Services Compensation Scheme (FSCS) if things go wrong.

It is now advertising a two-year fixed-rate bond paying 6% interest.

The FSA said it has "been working with ReGive Limited regarding its activities", in particular the 5% bond offer. "In order to resolve a number of issues and achieve the best outcome for ReGive and customers, ReGive has agreed to unwind the 5% bond, cancel all applications for the bond and refund all investors," the FSA said in a statement.

"Investors do not need to do anything and have been sent a letter from ReGive explaining the position and confirming the refund."

It appears the FSA is still in discussion with the mutual society over its 6% bond offering, for which people can register their interest but not deposit money at this stage.

The Guardian has contacted ReGive for a comment but has so far had no response.